Citing “the rare smoking gun,” a federal judge said investors may sue five big banks for conspiring to rig prices on hundreds of billions of dollars of bonds issued by mortgage financiers Fannie Mae and Freddie Mac over seven years, Reuters reported. U.S. District Judge Jed Rakoff issued a decision on Tuesday that said that investors can pursue antitrust claims against Bank of America Corp., BNP Paribas SA, Deutsche Bank AG, Goldman Sachs Group Inc. and Morgan Stanley. The judge said that chat room transcripts involving those banks’ traders were “direct evidence of a conspiracy to fix prices,” which investors said caused them to overpay for newly issued bonds between Jan. 1, 2009 and Jan. 1, 2016. “Here, we have the rare smoking gun,” Rakoff wrote. “The chats unmistakably show traders, acting on behalf of those defendants, agreeing to fix prices at a specific level before bringing the bonds to the secondary market.” Rakoff dismissed similar claims against 11 other financial services companies, but said that investors may amend those claims. The proposed class action is led by Pennsylvania Treasurer Joe Torsella, a Birmingham, Alabama public pension fund, and electrical workers’ retirement and health plans in Dorchester, Massachusetts. They sued after a report last year said the U.S. Department of Justice was investigating possible bond price-fixing.
